Question

S.Ltd. acquired a machine on 1st January 2010 at a cost of Rs 1,40,000 and spent Rs 10,000 on its installation. The firm writes off depreciation at 15% on WDV. The books are closed on 31st December every year. After 3 years machine sold for Rs 87,000. Profit Loss on sale =?

• A. Profit - Rs$1,023$
• B. Loss-$1,023$
• C. Profit - Rs$5,119$
• D. Loss - Rs$5,119$

Answer 1

The correct option is D Loss - Rs$5,119$

Profit/loss = Sales value - WDV of machinery

= 87,000 - 92,119.

= RS-5,119

Working notes :-

Depreciation for 1st year(WDV method)

= (1,40,000 + 10,000) 1,50,000 x 15/100

= RS-22,500

Depreciation for 2nd year(WDV method)

= (1,50,000 - 22,500) 1,27,500 x 15/100

= RS-19,125.

Depreciation for 3rd year(WDV method)

= (1,27,500 - 19,125) 1.08,375 x 15/100

= RS-16,256.

WDV on 31st December 2013

= Cost of machinery - depreciation (For 3 years)

= 1,50,000 - (22,500 + 19,125 + 16,256)

= RS-92,119.